Yahoo! Voices : When it Come to Pricing, Profit is Important

Pricing a product, or a service, is hard. There are so many different aspects to keep in mind. Wages, labor, material, and how much of a profit you need to make in order to keep your company afloat. Andrew Angus wrote a guest post for Yahoo! Voices on finding the right way to price your product. Check it out below! Don’t forget to leave your feedback in the comments section at the bottom of this post.

———

When I founded my company in 2006, there were literally no other companies doing what I wanted to do. Hooray! No competition!

But no competition also meant there was no way of comparing prices. I had no clue how to price our services, and like most people in that position, I worried about pricing too high. I thought getting the greatest number of customers to use our service was more important than high margins.

Well, I succeeded in getting customers at least. Within a year, I had employed 18 people, and there was plenty of work to go around. But we lost money every single day. I thought I was stuck with the model I’d started with because I didn’t want to alienate past clients. Slowly, after borrowing money, I was able to dig out of the massive hole I’d created and refocus our efforts on the right target audience who could pay what we needed to survive. Now, we charge the right amount to produce a quality video that will truly bring value to a client — but will also keep our doors open.

We survived, but we learned some hard lessons along the way. Here are some things I wish I had known from the beginning: